14 Feb

It’s that time of year again! RRSP Loan Strategy for down payment on Home


Posted by: Deborah Fehr


original post Feb 10/2011

RRSP Loan Strategy for Down Payment on Home

RRSP Loan Strategy for Down Payment on Home

Lachman Balani

Both are working drawing average pay scales of say $47,000 each, which puts them in the 31.15% tax bracket in Ontario. Melrose has RRSPs worth $5,000 and David has RRSPs worth $4,000 for a total of $9,000, but between the two they still have contribution room worth $45,000.

They wish to buy a home worth $400,000 with a 5% down payment, or $20,000, and the bank or mortgage agent has already given them the pre-approval, whereby they will have to pay about $1,860 for a 25 year amortization on $380,000($400,000- $20,000). As noted, they have $9,000 in RRSPs from past years but do not have the requisite amount of $11,000 to put into an RRSP now so that they can withdraw it 90 days later to use as down payment.

Enter the RRSP loan available from several lenders. What they can do is take an RRSP loan for $11,000 and choose to pay it over a period of ten years. The monthly payment for this is approximately $120 or $60 per person based on a loan rate of prime +2.75% or 5.75% currently. This is a very affordable monthly payment for a person making $47,000 per year. By paying such a low sum for the RRSP loan, they will also have ample money to cover their mortgage.

Lachman Balani

At this stage of the game, where the couple is looking to buy a home using the RRSP as down payment within the next few months, it is best to invest the $11,000 they have obtained through a loan into money market funds or a 90 day GIC so as to preserve the capital. 

Once the obligatory period of 90 days is over (say by sometime in April or May if they take the loan now in January or February), the couple can withdraw this $11,000 (even if the loan has not been paid off) from their RRSP and add it to the $9,000 they already have for a total of $20,000 down payment on their home. 

All this money is available to both David and Melrose tax and interest free in accordance with the government’s first time HBP.

It is important to stress here that after the RRSP funds of $11,000 are withdrawn, the couple is obligated to continue paying at least the minimum of $120 per month to pay off the RRSP loan. They can of course choose to pay it off sooner as well with no penalty.

Another extremely important added benefit to this strategy is that David and Melrose can deduct this $11,000 from their income and get 31.15% back in tax returns when they file their taxes in April. This is a total of $3,426.50 dollars which they will get back from the government in May that can be used towards the closing costs of their home, when they move in June or July (or later, as the case may be).

This is an extremely lucrative strategy, which not only helps David and Melrose to get the extra money needed for their down payment, but also generates a tax refund that they can use towards their closing costs or to buy furniture or whatever else they may choose to do with it.

Please note that the above is an overview of the strategy. 

To customize this strategy to suit one’s personal situation, please contact a financial advisor and/or mortgage agent

29 Jan

Buying and selling in the winter: should you wait?


Posted by: Deborah Fehr


Sandra Rinomato

Sandra RinomatoCanada AM real estate expert


Published Wednesday, January 14, 2015 7:55AM EST 

In the real estate market, how does winter compare to other seasons?

Winter is still a very viable time of year for real estate, in general. Sales happen every day, regardless of holidays, weekends, seasons. Typically, home sellers tend to shy away from winter because they are afraid they won’t find buyers, but over 18,000 buyers purchased in my trading area from Jan to March in 2014. So, there are some serious buyers out there, some would say they are very serious to be house shopping in the bitter cold.  As a matter of fact, inventory levels are low at this time of year, so there is less competition on the market. Couple that with serious buyers and you have an excellent selling scenario.  

Don’t forget, people need to move for many reasons: babies, deaths, job changes (good and bad, money related, location related) so every day is a good day to list your home for sale. And when it comes to condos, in my experience, they don’t follow any seasonal pattern. They are less susceptible to that.
What to consider before buying or selling a property in winter…

With less competition on the market, sellers may actually find themselves getting prices that they were not able to get in the fall. Sometimes this time of year the market is very brisk and the competition is sleeping, so get on it! Carpe diem!

If you are listing your home…

Keep in mind that the exterior is still very important to prospective buyers so you need to make the house and yard accessible, well lit, safe, and try to add a little touch of warmth through urns and seasonal greenery or ornamental arrangements.

Inside, same thing. Make it comfy, warm at all times (change the settings on the programmable thermostat), and add some tasteful but seasonal décor elements, like winter throws and accent pillows, blooming winter plants and lots of lamps set on timers to go on early, before dusk.

Also make available any pool reports you have from the company that closed it. Wash your furnace, they will definitely be looking at it! It’s also a great idea to display photos of your home in the spring and summer.  Show buyers what your yard and garden look like in the summer… it will help them see the full potential of your home. And don’t let the dog “go” in your yard, yellow snow is gross!

For those on the hunt…

As buyers, protect yourselves with conditions on the swimming pool and air conditioning units that give you time in the warm months to make sure they work properly. Your realtor will know how to do this. Get copies of utility bills for winter and summer months. Make sure to go back for a visit in daylight hours. Don’t be afraid to go into the back yard, garage and other out buildings. Bring a flashlight with you when you go on showings, and wear socks J
And talk to the neighbours to find out what they have to say.

Read more:

9 Jan

where Canada’s housing market is headed in 2015 and 2016


Posted by: Deborah Fehr

Where Canada’s resale housing market is headed in 2015 and 2016
Monika Warzecha

By: Monika Warzecha NOVEMBER 26, 2014

2611679744_587220d8d0_oPhoto: jjMustang_79/Flickr

The CMHC doesn’t think resale home prices in Canada’s major cities are about to drop any time soon. Looking into the fourth quarter Housing Market Outlook reports, the agency’s MLS price predictions for the remainder of 2014, as well as 2015 and 2016 are almost entirely on the upward trend.

We took a look at the forecasts from coast-to-coast, focusing on 14 major census metropolitan areas, and found that Fredericton was the only the metro where a price dip was predicted. It’s believed MLS prices in the New Brunswick capital will edge down 0.6 per cent between 2014 and 2015 and a further 0.8 per cent from 2015 and 2016, respectively.

On the flip side, CMHC doesn’t see price growth in Toronto slowing down soon. The agency expects the average MLS price for a Toronto home to hit $558,000 by end of year, a 6.5 per cent increase from 2013. But going into the future, the increases aren’t expected to keep up that pace. Between 2014 and 2015, the price increase is expected to be 2.2 per cent and a more modest 1.8 per cent from 2015 to 2016.

The sales predictions are more varied with Vancouver, Calgary, Victoria and Saskatoon seeing significant growth between this year and last. The CMHC was conservative in their estimates for future sales, forecasting lower levels of sales, even in hot markets in the Prairies in the years to come.

Check out our interactive charts and tables below to see where your city could be heading:



9 Jan

BC Forecast to Lead Nation in 2014 Home Sales: CREA and it could keep going!


Posted by: Deborah Fehr

BC Forecast to Lead Nation in 2014 Home Sales: CREA

BC set to post a 14.5 per cent annual increase in activity in 2014 – and it could keep going up, predicts Canadian Real Estate Association

December 16, 2014


Joannah Connolly


Sold apartment homes Vancouver

British Columbia is projected to post a 14.5 per cent annual increase in home sales activity in 2014 – the largest increase of all the provinces and territories, according to an updated forecast by Canadian Real Estate Association (CREA) released December 15.

The association said in its report, “In British Columbia, historically low mortgage interest rates have helped fuel a broadly based increase in the number of homes changing hands this year, although activity has only recently risen above its 10-year average.”

It added, “In British Columbia, activity is still expected to be held in check by eroding affordability for single-family homes. However, with sales in British Columbia now only at [10-year] average levels, they may climb further before rising interest rates begins to materially reduce affordability.”

Nationally, home sales are now forecast to hit 481,300 units in 2014, an annual increase of 5.1 per cent.

The CREA said: “While this places annual activity eight per cent below the record set in 2007, it marks the strongest annual sales since then.”

The national average home price is now projected to rise by six per cent year over year to $405,500 in 2014, with similar annual percentage price gains in British Columbia.

To read the full report, click here.

– See more at:

8 Jan

9 No-No’s of buying a Brand New Home


Posted by: Deborah Fehr

9 No-No’s of Buying a Brand New Home


Avoid these critical mistakes when purchasing a newly built home.

shutterstock_165286319-2-300x200Newly built or pre-construction homes are the house of choice for many homebuyers. Trulia recently asked Americans whether they would prefer to buy a newly built home or a previously-lived-in home, and a whopping 41 percent said they wanted brand-spanking new. Why?

Most people cite modern features and the ability to customize the home during the construction process as the top reasons for lusting after a new build. There’s also the use of energy-efficient materials and systems to up the appeal. However, buyers, caught up in the excitement of a new home can make some critical mistakes. Curious what they are? Here are the 9 no-no’s of buying a brand new home:

1. Buying Into Half-Finished Developments

There are lots of developments out there that are currently half-built. Keep a healthy dose of skepticism about these scenarios, even though you may be getting a great deal. In an uncertain world, it’s possible that you may be buying into a development or community that may never be fully completed — or may take a long time to finish. The worst-case scenario: You’ll be stuck with an unsellable house in the middle of an unfinished community. I’ve driven into many developments in which only 10 of the 40 lots have houses already built. The other 30 lots are giant plots of dirt that kick up sand and dust the moment the wind picks up. Though it may seem like a really good deal to you now, it will become very difficult to resell if you need to move before the entire community is completed. You need to ask specific questions about the number of lots sold and currently under contract. You may want to reconsider being the first or second out of 50 and buy in a later phase when there’s more certainty.

2. Being Fooled By the Picture-Perfect Model Home

Want to know one of the secrets of the new home trade? When buying new construction, you almost never ever get to see your actual home or unit. You see a model or prototype that is similar in floor plan to the home or apartment you are purchasing. Those model homes are always decorated and dressed to look magnificent. The developers and designers employ all kinds of techniques to make the model home appear bigger than it actually is. Often times they have furnished and staged them with slightly smaller-scale furnishings to make the rooms look bigger. For example, bedrooms generally have double-sized mattresses rather than traditional queens or kings.

3. Falling For the Sneakiest Model Home Trick

Builders often pull off the most deceiving of tricks in their model homes when they remove most of the interior doors between rooms to give the model home a much greater feeling of space and flow. I’ll bet you have never even noticed. Don’t let that little door trick slam you in the face! Be sure to consider the space when the doors are on the hinges and shut tight!

4. Not Knowing What’s Included vs. Extras and Upgrades

What’s extra? Find out exactly what upgrades are ― and are not ― included in the price you are being quoted. For example, you may think you’re getting an incredible deal, but what you didn’t think to ask was if the finished basement and the gourmet kitchen package are included. And, oh yeah, the walk-in shower isn’t included in your basic package. Once you start adding in those “wow” elements, the price can skyrocket from affordable to out-of-your-budget.

5. Going on an Upgrade Shopping Spree

Be conservative about which and how many upgrades you select. Determine which you can live without or do on your own later. Just as with any retail business, builders make their biggest markups and profits on the upgrades. Don’t get caught up in the frenzy and throw your budget out the new double-paned designer window (with custom shades, naturally).

6. Not Getting a Completion Clause

When’s it going to be finished? When purchasing new construction, you are at the mercy of the builder’s timelines. What is the date of completion of the house? Does it coincide with your needs? Make sure you get a cancellation clause or a refund of deposit clause if the builder does not complete by a specified promise date.

7. Ignoring Previous Phases

Looking at the new homes in phase two of a development? Go back to phase one. You may be overlooking a better deal. And you may be ignoring a lot information about the builder/developer that could be very useful. If you are buying in a community that is in phase two or higher, then hit up some neighbors from phase one. How easy was this developer to deal with? Any suggestions? Advice? In addition, notice if the phase one neighborhood is already established, with grown-in landscaping and completed, lovely homes. You might just prefer that to a future phase surrounded by bulldozers, infant trees, and blowing dust.

8. Not Carefully Reviewing the Surrounding Homes and Neighborhood

When buying new or pre-construction homes, you have the ability to pick the lot and the location of your home. However, can you see the neighborhood completed in your mind’s eye? Will the house that is yet to be built next door block your view? How close will your neighbors be? Will your living room end up looking into your neighbor’s master bath? Keep all that in mind. Also, consider the surrounding neighborhood. Are these shiny new homes surrounded by a rough neighborhood? You may be living in a new gated community, but that’s still your neck of the woods. Make sure you love it all.

9. Waiving Your Inspection

Just because you’re buying a brand new home that is in the process of being built from the ground up, it’s a huge mistake to try to save a few hundred dollars and bypass the inspection process. In fact, it’s a good idea to get an expert eye on a new home as it is being built. And if you can, have someone check out the house-in-progress. Get someone who can identify mediocre work or potential problems. You can oftentimes hire an inspector or an outside contractor to stop by the property and then pay him or her an hourly rate. It is money well invested.

– See more at:

29 Aug

Loyalty doesn’t pay when it comes to mortgage renewals


Posted by: Deborah Fehr

Loyalty doesn’t pay when it comes to mortgage renewals

A Bank of Canada study found that loyal bank customers don’t get best deal when they renew mortgage. People who switch and first-time buyers do.

A Bank of Canada study found that loyal bank customers don’t get best deal when they renew mortgage. People who switch and first-time buyers do.


A Bank of Canada study found that loyal bank customers don’t get best deal when they renew mortgage. People who switch and first-time buyers do.


Everyone you deal with would like you to believe there are rewards for your loyalty.

They may offer a better price, a bundling discount, or less tangible things like superior customer service. Sometimes your loyalty is rewarded and sometimes it isn’t.

The best way to figure out which is which is to become better informed about your choices. Compare prices and features, read the fine print on contracts and keep an eye on developments in the news. In this respect, the Internet has been a great leveler. The products are all on display in the online shop window. You can poke around, ask questions, figure out where you want to spend your money and negotiate a price.

The biggest investment most of us make is in a home. So if you can shave just a little off the cost of a mortgage, you can save thousands in interest payments.

Here, you’d think that loyalty would work in your favour — the more services you have with a bank, the better the deal. But, that’s not true according to evidence in a Bank of Canada paper called Discounting in Mortgage Markets. The 2011 study by three economists looked at a sample of Canadian insured mortgages between 1999 and 2004 to figure out who got the best rates.

The economists found that people who switch banks get a better deal than existing customers, because new customers offer the banks an opportunity to sell more products. Existing customers assume they will automatically get a better deal because they’re loyal, but don’t. They don’t bother to shop around because they assume they’ll get the best rate so, lacking ammunition, the discount may not be much. Those least likely to shop around are affluent, possibly because they’re happy with the full service they get from a bank and are willing to accept higher rates in exchange.

The study also found that mortgage brokers find the best rates . Mortgage brokers are paid by the lender, not the customer, but aren’t confined to one lender’s products. Their business is very competitive, so the pressure to find the very best rates is high. The study noted that brokers “are a significant factor driving discounts,” reducing the cost of a mortgage on average by 17.5 basis points.

As a group, first-time buyers do well because they are more likely to have shopped around, have tight budgets and so fight for every basis point. They’re a higher risk group for a bank because they have so much debt, but over time the bank can sell them more services. So they get good deals.

“Lenders are more willing to offer discounts to younger borrowers in return for future expected profits,” the study says.

Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, an industry group, isn’t surprised by the finding.

About a quarter of Canadian mortgages are done through a mortgage broker, but the portion of new buyers who use brokers is a much higher 40 per cent, he says. First-time buyers tend to be younger, more comfortable using the Internet and social media for research, and like shopping around, he says. They are also less loyal and happy to try new things — like a mortgage broker — if it gets them what they want.

“We don’t do as well with renewals,” Murphy says. “Your lender sends you something in the mail, you’ve paid off some principal, the new rate looks pretty good, so you say OK.

“But you should shop around. Just because a bank offers you a rate doesn’t mean it’s the best one.”

You remember when your mother said you should do your homework? She was right.

15 Aug

3 Myths about Home Staging


Posted by: Deborah Fehr

3 Myths About Home Staging 

By Audra Slinkey, Home Staging Resource

There’s been a lot of talk about staging a home to sell these days because for the first time in a long time, sellers are getting above asking price offers! Making the most money on the sale of the house is the name of the game, and the agents who can do that for a neighbor/friend becomes the agent of choice.

Unfortunately, there are quite a few myths about home staging that need to be corrected…

Myth #1 – Staging is mostly “decluttering.”

FALSE! Staging is about “styling for the photo shoot.”

While removing the extraneous in a home in order to give the seller a view of the architectural details is a part of staging, completely clearing off the kitchen counters, dining tables, and coffee tables is most definitely NOT what a good home stager recommends.

kitchen_blankslateListing photos online often show kitchens, for example, with completely cleared countertops and that are overall lifeless.

But an expert home stager works with the home’s integrity to capitalize and merchandise the space into something that will resonate with the buyer online first — so they’ll then want to see the home in-person.


Photo credit: Karen Scovie of Staging Consultants, staging


Myth #2 – Staging is mostly for vacant homes.

FALSE! Staging is more critical in occupied homes because it costs a lot less and has a huge impact.

Consider this photo online originally for this room (another overly “decluttered space”).

june carter before living

Once June Carter of stages the space using updated accessories the photo and room is transformed!

june carter cafter living

Myth #3 – Staging is about neutralizing and painting all the walls beige.

FALSE! Staging is about working with what the seller has, so that the more expensive cosmetic changes don’t need to done.

For example, look at this dark bedroom. It likely would benefit best from paint.


Debra Ostrus of Spaces Streamlined works first with the owner’s furnishings to inexpensively rearrange and photograph the space using the color scheme provided.


The challenge for most real estate agents is finding the kind of home stager who understands that staging is an art form in merchandising. We are creating a space the buyer will fall in love with. When we do this, the demand for the product goes up and thus the price too.

12 Aug

New homes made affordable – thanks to Mom & Dad


Posted by: Deborah Fehr

New homes made affordable – thanks to mom and dad

 Font size :  

Those who are hoping to get their first step on the property ladder may have a family discussion about how their parents may be able to help.

One option that could be considered is mom and dad selling their house to the adult child, but at a below market price but does this make good financial sense? Accountant Graham Williams says no.

As selling a principle residence is tax free, he says parents would be wasting an opportunity to maximise that benefit and suggests an alternative. Parents sell the house on the open market, downsize and use the left over cash to help the kids out. The gift would be tax free or the down-payment could be marked as a mortgage free loan to be repaid on the sale of the house; this loan would not have to be repaid in practice.

Williams suggests consulting with an accountant or lawyer to get advice on individual circumstances.

5 Jun

Bank of Canada maintains overnight rate target at 1 per cent


Posted by: Deborah Fehr

Bank of Canada maintains overnight rate target at 1 per cent

Available as: PDF

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

Total CPI inflation has moved up to around the 2 per cent target, sooner than anticipated in the Bank’s April Monetary Policy Report (MPR), largely due to the temporary effects of higher energy prices and exchange rate pass-through. Core inflation remains significantly below 2 per cent although it has drifted up slightly, partly owing to past exchange rate movements.

Global economic growth in the first quarter of 2014 was weaker than anticipated in the MPR and recent developments give slightly greater weight to downside risks. The U.S. economy is rebounding after a pause in the first quarter, but there could be slightly less underlying momentum than previously expected. Globally, long-term bond yields have continued their decline, reflecting in part growing market anticipation that interest rates will remain low over the long term. This, along with buoyant stock markets and tight credit spreads, indicates that financial conditions remain very stimulative.

The Canadian economy grew at a modest rate in the first quarter, held back by severe weather and supply constraints. The ingredients for a pickup in exports remain in place, including the lower Canadian dollar and an anticipated strengthening of foreign demand. Improved corporate profits, especially in exchange rate-sensitive sectors, should also support higher business investment in the coming quarters. There are continued signs of a soft landing in the housing market and a constructive evolution of household imbalances. We still expect excess supply to be absorbed gradually as the fundamental drivers of growth and inflation in Canada strengthen.

Weighing recent higher inflation readings against slightly increased risks to economic growth leaves the downside risks to the inflation outlook as important as before. At the same time, the risks associated with household imbalances remain elevated. The Bank judges that the balance of risks remains within the zone for which the current stance of monetary policy is appropriate and therefore has decided to maintain the target for the overnight rate at 1 per cent. The timing and direction of the next change to the policy rate will depend on how new information influences the balance of risks.

Information note:

The next scheduled date for announcing the overnight rate target is 16 July 2014. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.

1 Feb

Buying a house? Here’s how to get a big Tax refund


Posted by: Deborah Fehr

Republish Reprint

Garry Marr | January 29, 2014 | Last Updated: Jan 30 6:45 AM ET
More from Garry Marr | @DustyWallet

The $25,000 you can take out of your retirement fund to buy your first home doesn't go far these days, but it can land you a big tax break.

Chloe Cushman/National PostThe $25,000 you can take out of your retirement fund to buy your first home doesn’t go far these days, but it can land you a big tax break.
The $25,000 Ottawa allows you take out of your retirement fund to buy your first home sure doesn’t go as far as it used to

Under the home buyers’ plan, Canadians can take $25,000 out of their registered retirement savings plan and pay it back over the next 15 years without incurring any penalty. For a couple that means $50,000.

But the dollar amount has been stuck at $25,000 since 1999 while house prices have continued to escalate. At $50,000, you’re barely making the  minimum downpayment if you are buying a home in Vancouver with a mortgage backed by the government.

The Canadian Real Estate Association says the average price of a home will climb to $391,000 next year, meaning that $50,000 is less than 13% and not enough to avoid costly mortgage default insurance.

“I don’t know how effective the plan is now, so I’m not sure what would happen, if you increase the amount,” says Don Lawby, chief executive of Century 21 Canada.

It’s not just the amount. The tax-free savings account is now just as an effective savings vehicle. As of 2014, Canadians were allowed to contribute $31,000 and the amount increases every year. You can also withdraw money from a TFSA and put it an equal amount back later.


“I think you almost need a combination of the two plans together to fund that kind of investment,” said Mr. Lawby, about buying a house. “It depends on where you live in Canada.”

The home buyers’ plan was launched with a $20,000 withdrawal limit and it jumped to $25,000 in 2009.

One of the arguments against increasing the limit is it will encourage young Canadians to rob their retirement savings to buy a first home. Paying the money back over 15 years — there are significant penalties if you don’t — means you might not have the money to make current contributions.

“Some people say the RRSP is not the most efficient way of saving for a house,” says Benjamin Tal, deputy chief economist with CIBC World Markets.

He says there hasn’t been an acceleration in the use of the home buyers’ plan because first-time buyers are being squeezed out of the market.

“Older people and people buying second properties don’t use their RRSPs to buy homes,” says Mr. Tal. “You would expect given rising prices there would be more use [of the plan.].”

Vince Gaetano, a principal of, says the home buyers’ program is mostly being used by people as a tax loophole.

“This is the most popular time of the year to do it. They manipulate the system to deliver a tax return on the downpayment they will [already be] making on their purchase,” he says.

If you know you are buying your first home in the next 90 days, you make a $25,000 contribution or $50,000 for two people. That means a big refund in April. You then withdraw the $25,000 or $50,000 to pay for that initial home.

“Most people have the RRSP room. If you are buying a house by June and you have the downpayment in cash, you make the contribution to trigger the the refund,” said Mr. Gaetano, noting the $25,000 has to be in the plan for 90 days before you can take it out.

“You can garner $20,000 in refunds,” said Mr. Gaetano, pointing out it will depend on what your marginal tax rate is.